Business, Legal & Accounting Glossary
A lump sum cash payment paid by a buyer when he or she purchases a major piece of property, such as a car or house. The buyer typically takes out a loan for the balance remaining, and pays it off in monthly installments over time.
A down payment is the amount paid in advance of delivery of the purchased good or service, usually to demonstrate good faith. A down payment can be associated with any kind of purchase. In real estate, the term down payment takes on a slightly different meaning. The good faith down payment in the usual sense is instead called earnest money, a contract deposit, or something similar, with the term down payment referring instead to the amount contributed at closing by the financing buyer. The size of a down payment on real property is a good measure of the risk of default for the lender. The larger the down payment, the less likely the borrower is to default on a mortgage given the size of the loss the buyer would incur. The minimum down payment is thus an important characteristic of most mortgage products.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Down Payment are sourced/syndicated and enhanced from:
This glossary post was last updated: 22nd April, 2020 | 7 Views.